TWN Info Service on WTO and Trade Issues (Aug11/04)
3 August 2011
Third World Network  

WTO General Council discusses preparations for MC8
Published in SUNS #7201 dated 29 July 2011
 
Geneva, 28 Jul (Kanaga Raja) -- A mid-year meeting of the WTO General Council just before the summer recess took up, amongst others, a report by its Chair on his consultations to date to hear Members' views on the substance and organisation of the eighth Ministerial Conference (MC8) to take place here on 15-17 December.
 
Among the range of views that the Chair, Ambassador Yonov Frederick Agah of Nigeria, heard from Members during his consultations, he noted that for the future work programme after December 2011, suggestions were made on a number of new, or so-called "21st century" issues, examples of which raised in this regard include trade and currency exchange rates, climate change, and food security.
 
Apart from the preparations for MC8, the General Council also discussed, amongst others, the Director-General's report on the recently-held Third Global Review of Aid for Trade, and the Work Programme on E-Commerce.
 
Under the agenda item of the eighth session of the Ministerial Conference, the Chair of the General Council (GC) reported on his consultations to date on the upcoming ministerial conference.
 
In a statement (WT/GC/133), the GC Chair said that he has continued the consultations started by his predecessor on MC8. His consultations have been aimed at hearing Members' views about substance and organization of MC8, including work to take place after the Conference.
 
"In other words, this initial phase was about defining the ‘big picture'. We clearly need to first develop a common view as to what we want this Conference to do and how it should do it. Only then can we move on to settle other more detailed issues. The overall objective remains as we defined it at the outset - to produce a successful Ministerial Conference; one which, despite the current problems in the Round, will help to reinforce the value of the WTO system for all its members."
 
Since May, he said that he had met with a very wide range of Members in three rounds of consultations, which have included Group Coordinators, individual delegations, groups of delegations and the Chairs of the Council's subsidiary bodies.
 
The General Council Chair proceeded to provide an overview of the consultations by outlining the points on which he said he had seen "a high degree of convergence emerging".
 
According to the Chair, there was a general sense that MC8 would have to be a different event from MC7. This is largely because more is at stake - even, according to some, the credibility of the organization itself. More focus should be placed on the systemic and institutional issues. MC8 should strengthen the system as a whole, he added.
 
(The seventh ministerial conference took place in Geneva on 30 November 2009, and was written off by some trade observers from the start as being almost a non-event and a mere talk-fest, in the absence of any substantive negotiations in relation to the Doha Round. See SUNS #6828 dated 4 December 2009.)
 
In his statement, the General Council Chair said that most delegations also stressed that MC8 should send the message that the WTO is not synonymous with the DDA: the WTO is more than the Round. At the same time, there was a general sense that MC8 could not, and should not, avoid addressing the DDA. It was noted that possible deliverables under the Doha mandate were being pursued through the TNC (Trade Negotiations Committee) process chaired by the Director-General. A general view was also expressed that Development issues should remain central at MC8, and LDC issues in particular.
 
Turning to the organizing principles for MC8, the Chair said that there was unanimous support for reaffirming two principles that had helped make the previous Ministerial run smoothly.
 
First, the FIT principle (Full participation, Inclusiveness and Transparency), to be applied both in the preparations for the Ministerial and at the Conference itself. Secondly, the "gentleman's agreement" as agreed for MC7. This means that any Member pursuing an issue for decision, but not achieving consensus on it six weeks before the Ministerial, which means 2 November, will not insist on putting the item on the Conference Agenda.
 
Delegations also stressed the need to avoid what they termed the "Christmas tree syndrome" [trade officials characterised this as where members hang on every issue that they can think of], added the Chair. "Clearly, we all want the Conference to be a success, and for this to happen the Agenda we put before Ministers must be realistic in terms of the number of issues it contains, especially in the light of the short time available to them at MC8."
 
Ambassador Agah noted that Members recognized that three issues have to be taken up at MC8 under existing mandates: moratorium on e-commerce duties; moratorium on TRIPS non-violation complaints; and overview of WTO activities.
 
In terms of the structure of MC8, said the Chair, a number of delegations stressed that the discussions should be structured and focussed. There was general acceptance of a proposal to focus the structure of the Conference and its preparation on two main themes: (i) WTO work up until December 2011; and (ii) WTO work after December 2011 and perhaps up to the next MC in 2013.
 
On the substantive agenda of MC8, the General Council Chair noted that many ideas have been floated in his consultations. The suggestions he has heard under the first heading range from a focus on Development, including Aid for Trade and issues relating to LDCs and SVEs (Small Vulnerable Economies), to improving Accession processes. Other suggestions include strengthening the TPRM (Trade Policy Review Mechanism) and the monitoring mechanism, and broadening work on RTAs (Regional Trade Agreements).
 
For the future work programme under the second heading, the Chair further noted that "suggestions include addressing systemic aspects of WTO's work and a number of new, or 21st century, issues as they have been called. Examples of issues raised in this regard include trade and currency exchange rates, climate change, and food security."
 
Most of the issues raised so far in his consultations have a home in the existing structures and processes of the WTO. "In fact many of the issues are already part of the on-going work in these areas. We do not need to, and I do not intend to, duplicate these structures and processes. Instead the aim should be to use them to the maximum, so that issues of interest can be presented to Ministers through the reports WTO bodies will make to them via the General Council. These reports can of course include recommendations for action where any can be agreed. This approach appears to be well understood by the proponents."
 
In this regard, Ambassador Agah said that he is maintaining contact with the Chairs of the regular WTO bodies to help reinforce the processes as necessary, and hoped that all of the members will also make full use of the existing machinery. "The need to revitalize the work of regular WTO bodies, including notification and compliance, has been a common theme in our consultations. We can take a useful step in that direction right now by giving them their proper place in the preparation of the Ministerial agenda."
 
"We have seen a good deal of commonality in the issues identified in my consultations. This is already a positive sign. Of course approaches to these issues vary considerably at present. Working towards the necessary convergence on substance and process is a challenge in front of us for the autumn, as is working toward a shared view of the WTO's future work programme."
 
In the light of this, the Chair underlined some conclusions that he has drawn from his consultations over these past weeks:
 
"Firstly, we should remind ourselves that we all reject a ‘Christmas tree' approach to the Ministerial. The purpose of my recent consultations has been to ensure that where any issues do go forward to Ministers, in line with our agreed procedure, these are properly formulated and prepared. We should keep in mind that there are limits to what Ministers can do in three days, especially since we are pledged to respect the FIT principle.
 
"Secondly, we need clarity on the scope of the issues which will go to MC8. I hope that those of you who have raised an issue in my consultations so far will now develop it in a concrete and operational way and test it with colleagues. We cannot afford to create misleading ambitions for what the Ministerial can deliver.
 
"Lastly, I would like to stress the time factor. After the summer break we will have less than 14 weeks until the Ministerial, and some 7 weeks until the agenda closes. This is a very short timeframe in which to finalize the substantive content of the conference and settle remaining procedural issues. It will be made even tighter by the need to factor in the outcome of the on-going consultations on the DDA which the Director-General is undertaking."
 
On the issue of the outcome document of MC8 which the Chair said has been raised by some delegations in his consultations, Ambassador Agah said: "This is clearly a key element of our preparatory process, and we will have to address it more specifically when we return in September."
 
"Suffice it to say at this juncture that while some delegations have argued in favour of developing an agreed ministerial communique or even declaration, others felt that a Chairman's statement along the lines of the 2009 model might be preferable. Of course, the form it takes will depend to a great extent on the nature of the substantive issues we wish to transmit to Ministers. Whatever the precise form of the product, this is presumably where issues relating to the future work programme will be addressed, so it will be an important consideration in our further consultations."
 
"The first phase of our preparatory work, which could be described as one of issue identification, is now coming to an end. When we come back in September, delegations will need to shift to working through the appropriate processes to see what is realistically achievable in a pragmatic and realistic spirit," the General Council Chair stressed.
 
Several delegations spoke following the statement by the General Council Chair.
 
According to trade officials, Brazil said that MC8 must carry an important message to the world illustrating that the WTO role is not limited to the Doha Round and that a number of issues should be dealt with at this ministerial conference. It further said that it would be important to discuss non-DDA issues which are or could be part of the work, as well as to focus on the work that might take place between 2011 and 2013, this in terms of mapping out a programme of work. There is now a clear idea of what can and cannot be achieved by MC8.
 
Bangladesh, on behalf of the LDCs, said that it is extremely important that development is at the centre of the issues taken up at MC8. There is need for a meaningful, durable and relevant outcome. It is an opportunity to reaffirm our commitment to the DDA.
 
There were a number of non-DDA issues of importance to the LDC group, including simplification of the accession process for the LDCs, the food security issue as it pertains to Net Food Importing Developing Countries, extension of LDC waivers, the monitoring mechanism (on special and differential treatment) and the 28 agreement-specific proposals (that were ready for agreement at Cancun).
 
The EU said it attached high importance to some of the non-DDA issues and would like to see a substantive outcome on this. There is need to identify quickly those issues that are deliverable.
 
The EU pointed to some issues of importance that could be deliverable, including substantial improvements to the trade policy review mechanism, the transparency mechanism for Regional Trade Agreements to be made permanent, and the accessions issue to be addressed.
 
On the "21st century" issues, the EU said that it has interest in some of these issues. Although these may perhaps be more difficult to address than some of the other issues, "we should discuss them." It is too soon to talk about the type of outcome document, said the EU, noting that it could be that some issues would require a negotiated text, while others can be dealt with in a Chairman's text.
 
The Dominican Republic, on behalf of the Informal Group of Developing Countries, said that the issues of importance to the developing countries are monitoring and surveillance, Aid for Trade, the dispute settlement system, and accessions. At meetings that it had held, the issue of full participation of developing countries, especially LDCs, in the dispute settlement process is very important.
 
It wanted to see surveillance and monitoring enhanced in the Trade Policy Review Body, which is important to have if members want to avoid rising protectionism. It wanted to see more transparency in the accession process and the need to find some means of creating a framework for Aid for Trade for small and vulnerable economies. It also stressed the importance of food security for Net Food Importing Developing Countries.
 
Honduras said that it wanted to be part of the consultations. It was alright with the "gentlemen's agreement", but it was keen on ensuring that if something of an urgent nature comes up at the last minute, that this can be introduced.
 
China said that MC8 will be taking place at a critical time, which may determine the relevance of the WTO going forward. The ministerial conference must move forward rather than backward on the development mandate. To stop and re-boot the Doha mandate would not be the option for China. With respect to non-DDA issues, China said that there is already quite a long list of issues on the table, but it was ready to actively engage on these.
 
Japan said that the regular work of the WTO and identifying future work on the
21st century agenda were important. It wants to address the relevant issues, but is worried about the "Christmas tree" syndrome.
 
Under the agenda item of report by the Chairman of the Trade Negotiations Committee (TNC), Director-General Pascal Lamy, who is also the TNC Chair, provided a report similar to the one that he had made at an informal meeting of the TNC on Tuesday. Delegations asked for their statements made at the TNC to be put on the record of the General Council meeting (see SUNS #7199 dated 27 July 2011 and SUNS #7200 dated 28 July 2011).
 
Under the agenda item of Aid for Trade - Report of the Director-General on the Third Global Review (which took place on 18-19 July), Lamy reported that he believed that members have emerged stronger from the two days of experience sharing.
 
"We now have an encouraging narrative. It recounts how we are building trade capacity, not just for the short or medium-term, but importantly for the long-term. We are in a better position for the results we have been able to showcase. And for mobilising so many resources and expertise in the development and business communities. This has not gone unnoticed. We are also better placed for having debated the shortcomings of current approaches and practices, both with regard to the allocation and to the implementation of Aid for Trade," he said.
 
The Director-General added: "The theme of ‘transcending artificial boundaries' is one I would like to see form the centrepiece of the new work programme. It means remaining true to the mandate we have. Actions here could include strengthening our analysis of how Aid for Trade can support areas such as IP [Intellectual Property], Services and Standards. But it also means recognising the intersections of the initiative with other areas essential to sustainable development, such as food security, gender empowerment, climate change adaptation or energy, to name a few. This is why I would like to see the work programme ahead be based around the theme of ‘Deepening Coherence'".
 
Lamy went on to suggest some areas for examination in moving forward, namely, resource mobilisation (which he said must remain at the core of the initiative), mainstreaming, engaging the private sector, aid effectiveness, taking South-South cooperation to a higher level, and regional integration.
 
"These are my views. But what counts now is that you work out the details," Lamy told members at the General Council meeting.
 
Several delegations responded to the Director-General's report on the third global review.
 
According to trade officials, Lesotho said that one very important element that came out of that meeting was that the Enhanced Integrated Framework (a support mechanism for the least developed countries) was in full flow and its effectiveness is already evident in many quarters.
 
Brazil said that it was pleased with what it had seen, and particularly making an impression was the number of case studies that had come out (some 275). It said that South-South cooperation was an important component of achieving the UN's Millennium Development Goals.
 
There are some particularities that differentiate this from other official development programmes, such as that there are no conditionalities that one may see in others, and there are no provisions that hinder the transfer of technology. It is a demand-driven and a full-participation programme and is an effective means of addressing supply-side constraints, said Brazil.
 
Ecuador said that the trade figures show that Aid for Trade can be an important way of addressing capacity constraints. It is evident that Latin American countries are not receiving as much (Aid for Trade) as Asian or African countries, perhaps because they tend to be medium income countries as opposed to low income countries.
 
Bangladesh, on behalf of the Least Developed Countries (LDCs), said that it hoped that in future further attention can be given to building on what came from the third global review. It would like to see recommendations coming forward about how specifically to benefit the LDCs.
 
Korea said that trade effectiveness needs to be something that is carefully monitored.
 
The European Union said that there is increasingly need to show taxpayers that Aid for Trade is generating more trade flows which in turn is generating more growth, which in turn is assisting in poverty alleviation efforts. It is very important that results can be shown from this programme that are of benefit to the poorest.
 
There is need to accelerate the way in which best practices are assessed. Regional integration in very important for the EU as well as engaging the private sector, whether it is trade finance or public-private partnerships. In many ways, these things feed on each other, so it is important that the private sector be engaged. South-South trade is important as well, the EU added.
 
The United States said that the global review is helpful in terms of identifying challenges and priorities. It said that it is strongly committed to the Aid for Trade programme as a complement to trade liberalisation. Since 2001, the US said it has given $11 billion to Aid for Trade programmes. It is now five years since the launch of the programme, and the time is ripe to evaluate what the programme has delivered.
 
It is important to make the most effective use out of every dollar that is given, and in addition, you need to use information that may came out of assessments of the Aid for Trade as part of the broader official development assistance discussion on aid effectiveness, the US added.
 
Under the agenda item of work programme on E-Commerce, a proposal was tabled by Cuba, Ecuador and Nicaragua (trade officials said that Bolivia subsequently co-sponsored the proposal) on "Effective Participation of Developing Countries in Electronic Commerce as a Means to Combat Poverty." (WT/GC/W/635).
 
According to the three proponents, the purpose of the proposal is to examine a range of significant difficulties faced by developing countries and make recommendations on action to be taken.
 
The proposal notes that from the mid-1990s, the development of information and communication technologies (ICTs) led to an increase in the types of trade conducted by electronic means, thus giving rise to the concept of "electronic business", which broadens conventional e-commerce facilities through the addition of new applications such as Electronic Funds Transfer, Internet marketing, Electronic Data Interchange (EDI), Customer Relationship Management, and new business models for companies and even consumers, all of which extend the scope of and reduce the costs and distances involved in trade in goods and services.
 
In recent years, however, the proposal adds, the increase in the different forms of e-business has not been uniform in all countries and has widened the existing digital divide between developed and developing countries. A study carried out by Everis, a Spanish multinational consultancy firm, and the Centre for Latin American Studies of the University of Navarra, shows that, in 2009, 82.3 per cent of world electronic sales were concentrated in developed countries, primarily the United States and Japan, with only 17.7 per cent being ascribable to developing countries, three quarters thereof to Brazil, India, China, Indonesia, Turkey and Russia.
 
"This digital divide limits the production and dissemination of knowledge, exacerbates economic backwardness and dangerously intensifies the lack of understanding between peoples. Given the benefits already available to many countries through the Internet and electronic commerce, not having access to that environment and to all the technology needed for its development is a problem that should be addressed urgently."
 
The proposal also highlights other difficulties concerning discriminatory conditions relating to international access and connection to the Internet or other forms of technology needed for data protection, electronic payment, and content and privacy regulation, and the fiscal implications of electronic commerce. Despite major differences in the prices of broadband in the region (some users pay between US$30 and US$53, others between US$13 and US$25), its high cost is one of the greatest obstacles to the further development of the electronic commerce infrastructure.
 
"The exponential speed of ICT development, the many regulatory areas linked to electronic commerce (intellectual property, taxation, privacy, consumer protection, security), and the lack of explicit support for micro, small and medium sized enterprises in developing countries in terms of the effective use and exploitation of electronic commerce as a tool for poverty alleviation, pose a significant challenge to the international community, in particular to governments and international organizations, which should make it a priority to synergise their efforts, since one entity alone cannot solve all the existing problems or establish effective, appropriate and operational measures to eliminate, or even reduce, the difficulties faced by developing countries in accessing ICTs," the proposal concludes.
 
The three countries propose a "Draft Ministerial Decision on Effective Participation in Electronic Commerce as a Means to Combat Poverty", whereby members decide:
 
"1. To promote access, on non discriminatory terms, to all information and communication technologies for the growth of electronic commerce in developing countries, including access to public Internet sites. A permanent reporting mechanism shall be established in the Committee on Trade and Development for cases in which such access has been obstructed.
 
"2. To recommend that providers of international Internet connections agree to bilateral or regional commercial arrangements enabling them to establish direct international Internet connections and to increase broadband connectivity and capacity in developing countries, reducing current costs. The Committee on Trade and Development shall monitor the implementation of national and regional initiatives to this end.
 
"3. To set up a working group on the relationship between electronic commerce and development, open to the participation of all Members, under the auspices of the Committee on Trade and Development. The Working Group, with support from the Secretariat, shall examine the most effective and efficient means of promoting achievement of objectives relating to training, and the use and facilitation of access to electronic commerce by small producers, including micro, small and medium sized enterprises. The Working Group shall report periodically, at least every six months, to the Committee on Trade and Development.
 
"4. The Committee on Trade and Development, on the basis of the reports submitted by the Working Group on Electronic Commerce and Development, shall identify the most effective and efficient means of promoting achievement of the objectives established in the WTO framework. The Committee on Trade and Development, in special session, shall submit periodic reports with recommendations to the General Council.
 
"5. The General Council shall consider the reports of the Committee on Trade and Development in Special Session and shall decide on any action it deems necessary, with a view to supporting and promoting the development of electronic commerce by developing countries as a tool for development and poverty reduction."
 
According to trade officials, Cuba introduced the proposal and also spoke particularly on the problems that it is facing as a result of the US embargo imposed on the country. It said that this has greatly hindered Cuba's access to technologies it needed. It said that it is finding that companies that are trying to use e-commerce as a means of selling or finding access to the worldwide web are being denied due to the country's domain name - dot cu.
 
It added that its central bank is being affected in terms of its participation in certain international banking systems, and its airline is also affected, much of this being due to the difficulty of obtaining the necessary technology which is produced largely in the US.
 
Ecuador said that over the last ten years, Information Technology (IT) has been an important tool in addressing poverty, but e-commerce has not had the same impact in developing countries as it has elsewhere. It hoped that a decision on this at MC8 would be adopted.
 
Bolivia and Venezuela also would like to see a decision on this be adopted at MC8.
 
Nicaragua voiced solidarity with Cuba in its fight for more just conditions to participate in the work of the organisation.
 
Japan said that it was still examining the paper, but added that in general members must be careful about creating new work programmes and should avoid duplicating the work of the International Telecommunications Union (ITU). It would like to discuss this issue in more detail in the relevant committees.
 
Argentina said it was studying this proposal and looked forward to participating in the fall.
 
The EU said that it supported the invigoration of the work programme on e-commerce. It welcomed the proposal and looked forward to participating in the discussions. There is need for more details and to examine the proposal more carefully. The scope of the expectations need to be more clearly defined, it added.
 
The EU also mentioned a proposal on the means to enhance the development of e-commerce that it had put forward jointly with the US to the Council for Trade in Services (S/C/W/338).
 
The US said that although it has taken some time to re-invigorate the e-commerce initiative, it is now welcoming the fact that it is now back on the rails. It said that it is still reviewing the Cuban proposal. It added that one key way to encourage development in e-commerce is to have an open, transparent and accessible market for IT and communication services.
 
Brazil said that it is reviewing the proposal and is consulting with capital.
 
Cuba, in response, thanked delegations for their comments, many of which, it said, were quite useful.
 
On the review of progress to date on E-Commerce, WTO Deputy Director-General Harsha Singh, who is under instructions from the General Council Chair to hold consultations on this issue, mentioned the proposals that have come forward on E-Commerce including the Cuba, Ecuador and Nicaragua proposal, and the one by the EU and the US.
 
He said that on 24 May, the US asked the Goods Council to take up the E-Commerce issue at the next meeting. On 14 July, an informal meeting was held and was chaired by the Deputy Director-General, at which a number of proposals were put forward. Harsha Singh said that the general feeling is that at the end of this meeting, the amount of work that was on the table constituted a good basis for moving the work forward. +